Investing in airline stocks is a challenge at the best of times — and this is far from the best of times. In this capital-intensive, high-cost, low-margin business, the difference between a solid investment and a potentially scary one is just as much about performance metrics and passenger perception as it is about numbers.
Most U.S. airlines’ latest quarterly earnings are much improved over last year, and many performance metrics are up too. The Bureau of Transportation Statistics recently said 86.2% of all flights arrived within 15 minutes of the scheduled arrival time in February — the highest on-time performance for the sector since BTS began keeping records in 1988. The rate of mishandled bags also set a record low of 2.6 bags per 1,000.
Despite those glowing numbers, airline passengers are growing increasingly dissatisfied with customer service. The recently released Airline Quality Rating report found that passengers were less likely to lose their luggage, arrive at their destination late or be bumped from a flight in 2011. But despite the performance improvements, 53% of frequent flyers say their air travel experience has gotten worse in the past year.
So which airline is doing the best job on all three fronts — financial, performance and customer perception? Let’s run the numbers. I’ve created a five-point scale for each of these categories; each airline will be ranked based on the total number of points, with a maximum score of 15. We’ll also discuss how attractive their stocks look.
Here’s how these six carriers stack up: